“May you live in interesting times,” is a legendary Chinese curse. In the guise of well wishing, it conveys the irony that difficult, dangerous or even turbulent times are what the recipient should experience. There is no known Chinese source for this saying, but, as curses go, it is apt for 2017. Asking around, it seems that nearly all of us know what it feels like to be afflicted!
So, how will interesting times be manifested in 2017 in the world of UK property? How can you avoid coming to the attention of the Authorities? And how can ensure that you are looking for the right things? Possibilities for 2017 include the following:
1. From April 2018, it will be illegal to let or re-let commercial properties in England and Wales rated F or G on their EPCs. Before such properties can be let, cost-effective works need to be undertaken so that the property’s rating is improved to at least an E, unless certain exemptions apply. These exemptions must be applied for and registered on a central register which is due to come into being on 1 April 2017. There will be a similar register for residential properties from 1 October 2017.
2. Many businesses in the UK (particularly in the south) are facing substantial business-rates increases following the revaluation that will be published on 1 April 2017, and the annual increase in the multiplier. There are transitional reliefs, but only for those facing an increase in excess of 42% per annum, so there is scope for pain. Individual revaluations should be thoroughly reviewed and checked for flaws, and budgets need to be flexible enough to accommodate the likely increases.
3. Rating Assessments of multi-occupied buildings or sites are subject to a change in practice by the Valuation Office Agency following a recent case involving Mazars, so that premises that were previously on an aggregated basis may now be assessed as separate premises, leading to a higher assessment. Steps to mitigate the likely resulting increases in rates, to gain the advantage of quantum discounts, may become more widespread. Artificial measures should be avoided, as ever.
4. The Digital Economy Bill is going through Parliament and includes extended rights to telecoms operators to have simplified and increased access to public and private land to install telecoms equipment. This is expected to become law this spring.
5. Some new case law is in the offing from the Court of Appeal relating to assignments of leases. If the judgment follows that obtained in the High Court, it will no longer be possible for tenants to assign their leases to their guarantors. This is seemingly a narrow point but may impinge on group restructurings (e.g. on insolvency), possibly including some transactions that may have already occurred. The relevant case is EMI Group Limited v O&H Q1 Limited.
6. Partnership law is going to change in in England & Wales with the creation of a new kind of entity called the “Private Fund Limited Partnership”. Unlike the position under the present law relating to limited partnerships, this new form of partnership will permit the limited partner to be involved in a prescribed and limited list of activities and decisions.
7. The Law Commission is due to bring forward recommendations for changes in property law relating to easements, covenants and profits. Already tabled are recommendations for simplification of the law on rights of light and forfeiture and the creation of a new type of covenant called a conservation covenant, which would offer long-lasting protection to landowners for conservation. We may see a new Law of Property Bill.
8. Complex changes are due to be introduced relating to the taxation, the tax domiciles and the treatment of enveloped residential property. Anyone considering de-enveloping should be analysing this now and implementing any changes before April 2017.
As ever, we would be delighted to assist you in dealing with any property-related issues or transactions. We deal with the curse of complexity, but without resort to black magic!